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3 Recent Regulatory Updates That You Need to Know About

Though business leaders in the home furnishings sector must keep a watchful eye on ever-changing aesthetic trends, consumer tastes are not the only factor influencing furniture design and supply chain decisions. In order to keep their operations efficient and compliant, furniture companies must stay abreast of evolving regulations governing the sourcing, manufacturing, transportation, and sale of their products.

New laws and federal agency rules are constantly creating new challenges and considerations for furniture firms. The following are some of the most recent regulatory developments impacting the United States furniture industry:

  1. The New EPA Rule on Formaldehyde Emissions

The United States Environmental Protection Agency (EPA) recently issued a new rule aimed at limiting the health risk posed by formaldehyde in consumer products. Certain items made of composite wood, such as furniture, cabinets, and flooring, can emit levels of formaldehyde that may be harmful to both humans and animals in the home. Sustained exposure to this colorless, odiferous, and highly flammable gas can cause health complications related to the eyes, nose, and throat, including conditions as serious as cancer. For this reason, the EPA’s new rule establishes stringent formaldehyde emissions standards for composite wood products sold in the United States, setting up one of the world’s strictest regulatory frameworks governing formaldehyde content.

In December 2016, the EPA issued the final draft of its formaldehyde emissions standards. The newly finalized rule outlines guidelines for compliance with the 2010 Formaldehyde Standards for Composite Wood Products Act, which comprises Title VI of the Toxic Substances Control Act. It applies to both imported and domestically produced composite wood products, including hardwood plywood, particleboard, and medium-density fiberboard, as well as finished products containing these materials.

The final version of the EPA’s formaldehyde rule is extremely similar to the pre-publication draft released by the agency in July 2016. It sets forth requirements for product testing, labeling, and the management of records such as chain of custody documents, in addition to setting up a third-party certification program and establishing standards for the accreditation of these certifying bodies.

The final rule also provides specific limits for the formaldehyde emissions of certain composite wood products. It caps hardwood plywood emissions at .05 parts per million (ppm) and limits particleboard to .09 ppm, while medium-density fiberboard and thin medium-density fiberboard may contain .11 ppm and .13 ppm, respectively. These standards may be familiar to some furniture industry professionals, as they largely mirror the formaldehyde emissions guidelines upheld by the California Air Resources Board between 2009 and 2012.

The EPA’s formaldehyde emissions standards for composite wood products are the result of significant research, deliberation, and industry collaboration. An initial draft of the rule proposed in 2013 met significant industry resistance due to what many companies deemed excessive testing requirements. After drawing on the feedback of industry members to develop more mutually acceptable guidelines, the EPA released its final rule, with an intended effective date of February 10, 2017. However, a mandatory regulatory freeze enacted by the incoming presidential administration in January 2017 extended this date by several weeks on two separate occasions, ultimately pushing it back to May 22, 2017.

Furniture industry suppliers, manufacturers, and retailers who still need to familiarize themselves with these new regulations may review them here.

  1. Department of the Interior Regulations Requiring Sustainable Rosewood Imports

Rosewood is a popular material often used to give an elegant flair to the exterior of higher-end furnishings such as tabletops, headboards, and drawer fronts. However, the irresponsible sourcing of rosewood can have dire consequences for the ecosystems where rosewood thrives.

On Janury 2, 2017, the US Department of the Interior’s Fish and Wildlife Service formalized a rule that will ensure the legal, environmentally responsible sourcing of rosewood. The new regulation applies to nearly 300 major species of rosewood within the genus Dalbergia, as well as kosso (also known as African rosewood), East Indian rosewood, cocobolo, and Honduran rosewood.

It requires companies to obtain permits proving that their rosewood suppliers are harvesting the material legally and sustainability, and with no phase-in period, the regulation has required furniture companies to promptly assess their supply chains for compliance. Following the issuance of the new rule, many firms found themselves conducting audits of shipments currently in route to avoid issues at customs.

The Fish and Wildlife Service’s new rosewood regulation falls under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), an international treaty designed to ensure that business practices do not endanger natural habitats or the species that they host. Ratified by 182 nations since its establishment in 1975, CITES currently defends over 35,000 plant and animal species.

  1. Impending Duties on Chinese Plywood Imports

Mounting concern over unfair international trade practices could lead some furniture companies to reexamine their supply chains. In November 2016, a group of 12 American hardwood plywood manufactures, collectively operating as the

Coalition for Fair Trade of Hardwood Plywood, filed a petition alleging that unfair pricing practices by Chinese suppliers have led to layoffs and financial losses throughout their sector. To remedy this, the petition specifically requested that the government levy new countervailing duties on Chinese plywood imports, which would account for alleged subsidization provided to Chinese firms by the nation’s government, as well as anti-dumping duties, which would address concerns that suppliers have imported materials to US manufacturers at prices far below the cost of raw materials.

After several months of deliberation, the US Department of Commerce recently announced countervailing duties of up to 111.09% for 61 Chinese board producers. Going forward, the department may establish additional anti-dumping duties, as well as duties to address the financial damages sustained by the petitioners.

It is important to note that these duties do and will not apply to finished products imported from China. Rather, they apply only to panels imported for the construction of furniture within the United States, excluding all structural panels intended for use in ready-to-assemble furniture. While industry experts allege that these duties should have no immediate significant impact on American furniture companies, they may very well lead American furniture and cabinet companies to reassess the cost efficiency of their supply chains.